Powell worries US small businesses may not withstand final stretch of pandemic damage
Many business leaders forced to close due to revenue lost over restricted operations
Federal Reserve Chair Jerome Powell on Wednesday warned that small businesses across the country – which are critical to U.S. economic growth – are barely hanging on, and will likely not be able to make it through the next few months without support.
Powell said during a news conference following the December Federal Open Market Committee (FOMC) meeting that while we can “see the light at the end of the tunnel” as vaccines become a tangible reality, it would be “bad” to see people losing their businesses “because they couldn’t last another few months, which is what it amounts to.”
“We know there are small businesses all over the country that have been basically unable to really function and they’re just hanging on,” Powell said. “They’re so critical to our economy.”
While Powell said the Fed can do more to support the U.S. economy, like expanding its asset purchase programs, he said that over the near-term people need help that “isn’t just from low interest rates.”
The Fed chair added that it was his understanding that support for small business is being discussed among lawmakers who are working on an additional stimulus package – though compromise has so far remained elusive in discussions that began over the summer.
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Powell’s comments come as residents of major cities, like New York and Los Angeles, push back on local leaders for their decisions to close small businesses –like restaurants – as coronavirus cases surge.
Many business leaders have been forced to permanently close shop due to revenue lost over restricted operations. Americans and politicians have been divided throughout the pandemic over balancing the need to save both lives and livelihoods.
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The Fed Reserve Board of Governors announced on Tuesday that it planned to hold the federal funds rate near zero for the foreseeable future – possibly even through 2023.
The central bank also adjusted its forecast for U.S. economic growth in 2020, expecting a shallower contraction than it had previously estimated in September at 2.4%. However, economic forecasts are highly uncertain and will depend “significantly” on the trajectory of the pandemic.
Powell said that Americans should be able to return to a sense of normalcy in the second half of next year after people have access to the vaccine, which will help economic activity begin to recover.
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